HSBC bullish on MFIs; Sees better return potential in Ujjivan SFB, Equitas SFB

HSBC has expressed a positive sentiment for microfinance institutions (MFIs) in 2025, citing strong growth prospects and improving financial performance. However, the brokerage flagged high valuations for CreditAccess Grameen, which is trading at 1.8x FY26 book value per share (BVPS).

Key takeaways from HSBC’s report on MFIs

• The microfinance sector remains well-positioned for growth, supported by rising credit demand and stable asset quality.
• CreditAccess Grameen’s valuation is considered expensive, limiting its upside potential.
• Ujjivan Small Finance Bank (SFB) and Equitas SFB are seen as better return opportunities due to their more attractive valuations and stronger risk-reward profile.

HSBC’s outlook suggests selective opportunities in the MFI space, favoring undervalued players over premium-priced stocks.

(Disclaimer: This article is for informational purposes only and does not constitute financial advice.)